GUANGZHOU GREEN-ENHAN BIO-ENGINEERING CO LTD AND ANOTHER v. GREEN POWER HEALTH PRODUCTS INTERNATIONAL CO LTD AND OTHERS

HCA 4651/2002
HCA 2802/2003
HCMP 74/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4651 OF 2002, 2802 OF 2003 and

MISCELLANEIOUS PROCEEDINGS NO. 74 OF 2004

____________

BETWEEN

____________

(The Consolidated Action)

_____________________________

REASONS  FOR  RULING

_____________________________

1.  On 21 August 2004, after hearing submissions from the parties, I ruled that in the light of the decision by the Intermediate People’s Court in Guangzhou (廣州中级人民法院) [“the Intermediate Court”] on 1 January 2004 [“the Judgment”] in case No.95 of 2003 (穗中法民三初字第95号) [“Case No.95”] and having regard to the permissible scope and purpose of expert evidence, certain parts of the expert evidence on PRC law are inadmissible.  I now give reasons for that ruling.

2.  Mr Liao SC advanced the following propositions on expert evidence as to foreign law which are not disputed by Mr Ling,

(a)     the function of an expert witness on foreign law is as follows,

i       to inform the court of the relevant contents of the foreign law; identifying statutes or other legislation and explaining where necessary the foreign court’s approach to their construction;

ii      to identify judgments or other authorities, explaining what status they have as sources of the foreign law; and

iii     where there is no authority directly in point, to assist the judge in making a finding as to what the foreign court’s ruling would be if the issue was to arise for decision there.

See MCC Proceeds Inc v Bishopgate Investment Trust [1999] CLC 417 at 424.

(b)    When there is authority directly in point, there is no room for experts to give evidence to determine the likely outcome of the foreign court applying the foreign law, see National Bank of Egypt International Ltd v Oman Housing Bank SAOC [2003] 1 All ER (Comm) 246.

(c)     In Hong Kong, the court accepts the judgment of the courts in the mainland as evidence of the law in the mainland, see First Laser Ltd v Fujian Enterprises (Holdings) HCA 4414 of 2001, 12 December 2002, Para.56; Shenzhen Development Bank v New Century International (Holdings) Ltd HCA 2976 of 2001, 31 July 2002 at Paras. 33 to 36.

(d)    Although there is no specific reference to a particular point in a foreign judgment, so long as the court is satisfied that the point could not have escaped the attention of the foreign court or the parties, the foreign court should be regarded to have decided that point as well, see Shenzhen Development Bank v New Century International (Holdings) Ltd HCA 2976 of 2001, 31 July 2002 at Para.35. 

3.  Subject to a rider which is not material in the present case, I accept these propositions as correct.  The rider is in respect of proposition (b).  In a case where there are conflicting decisions in the foreign court or where it is clear that a piece of relevant legislation had not been considered, I think there might still be scope of expert evidence.  Having considered the expert reports in the present case, I do not think the case falls within any of these exceptions.

4.  In addition, it is not the role of an expert to act as advocate for those engaging him nor should he be asked to give evidence on the construction of certain documents (see Rogers JA (as he then was) in Chen Paul v Lord Energy Ltd [1998] 1 HKC 702).  The same principle applies even if the documents that the court has to construe were issued by government agencies.  Opinions from an expert should be confined to matters which the court requires the assistance of his expertise in order to adjudicate the disputes between the parties properly (see Hong Kong Civil Procedure 2004 Vol. 2 Para.L1/58/8).

5.  In the several statements of the Defendants’ expert 姜同光, he dealt with, inter alias, the following matters,

(a)     the status of the FER Centre and its relationship with the 2^nd Plaintiff;

(b)    ratification of the contracts made by FER Centre by the 2^nd Plaintiff;

(c)     the capacity of the 2^nd Plaintiff to sue on the contracts made by the 2^nd Plaintiff;

(d)    whether the non-competition clause in the distribution agreements contravened the PRC unfair competition legislations including Section 12 of 反不正當競争法 and Section 4 of 民法通則;

(e)     lack of performance of the obligations by the FER Centre under the distribution agreements.   

6.  The 1^st Defendant was the plaintiff in Case No.95.  The 2^nd Defendant was its director and its designated representative in that action.  Originally, it sued the FER Centre as the defendant. On 26 March 2003, the Intermediate Court held that the FER Centre was not a legal entity and it could not be sued.  On 20 July 2003, the plaintiff in that case amended the writ to sue the 2^nd Plaintiff as the defendant in that action.  The Intermediate Court also directed on 25 July 2003 to add the 1^st Plaintiff as co-defendant to that action.

7.  The plaintiff’s (viz. the 1^st Defendant in the present action) claims in Case No.95 revolved around the validity of the distributorship agreement of 13 February 1999 and Clause 3(7) thereunder.  The relief sought were for declarations that the said agreement and the said clause were invalid and/or unenforceable (see p.3 of the Judgment at Trial Bundle U p.125).

8.  In the Judgment, the Intermediate Court held and found as follows,

(a)     the FER Centre was part of the 2^nd Plaintiff and the 2^nd Plaintiff could validly ratify the contracts signed by the FER Centre;

(b)    the ratification letter issued by the 2^nd Plaintiff dated 10 December 2002 was a valid exercise of the power of ratification.  By reason of that the 2^nd Plaintiff became a party to the contract;

(c)     the contract had been performed by the 2^nd Plaintiff with the full knowledge of the 1^st Defendant and the 1^st Defendant had never raised objection;

(d)    the submission by the 1^st Defendant in Case No.95 that the contract had not been performed was rejected;

(e)     the contract was valid and enforceable under PRC law. 

9.  Hence, all the matters alluded to in Paragraph 5 above have been decided by the Intermediate Court in the Judgment.  But we are not dealing with question of issue estoppel as this is not the basis on which the Plaintiffs invited this court to exclude the evidence.

10.  The issue before me is whether there is any scope for admission of the expert evidence on those matters in the light of the Judgment and the principles set out in the beginning of this Reasons for Ruling. In my judgment, insofar as those issues touch upon factual matters, in the present circumstances, expert opinion is of no assistance for the reasons set out in Paragraph 4 above.  It seems to me issues (a), (b) and (e) in Paragraph 5 are primarily issues of facts.  I note that the Defendants’ expert in giving his opinion on issues referred to certain administrative decrees and directives.  I doubt whether those could be regarded as real issues of law.  It seems to me this court is in as good a position as the experts to resolve the matters after examining all relevant documents and factual evidence.  In any event, insofar as they raise any issues of law, that had been decided by the Intermediate Court. 

11.  In respect of issue (c), once relevant findings are made in respect of issues (a) and (b), there is no separate issue of law involved.  The Defendants’ expert did not challenge the 2^nd Defendant’s legal capacity to commence legal proceedings as such.  His opinion was basically that the 2^nd Defendant could not sue on these contracts because it was not a party thereto and the FER Centre was not part of the 2^nd Defendant.

12.  Issue (d) does raise some question of law.  Mr Ling submitted that this had not been dealt with in the Judgment.  He adverted to the lack of reference of Section 12 of 反不正當競争法 and Section 4 of 民法通則 in the Judgment.  I have considered the terms of these two pieces of legislation.  It is plain to me that the Intermediate Court did consider the question of legality of the contract by reference to them.  The said Section 4 reads,

“民事活動應當遵循自願、公平、等价有償、誠實信用的原則。”

The said Section 12 reads,

“經营者銷售商品，不得違背購買者的意願，搭售商品或者附加其他不合理的條件。”

13.  At p.13 of the Judgment (Bundle U p.135), the Intermediate Court addressed the attack on the validity of the contract and its enforceability by referring to the criteria set out in these legislations,

“《關於許可採用“天維牌”包裝銷售純靈芝孢子粉膠囊產品合同書》是簽約三方當事人的真實意思表示，內容合法，而且已經實際履行。該合同第3條第（7）項是當事人自愿約定的，該約定的目的在於保護原告已經開拓的產品銷售渠道、保證其商品的信譽，而且這也是原告成為本案合同產品代理經銷商的對價條件。如原告認為該約定對其不公平，應當在法定期限內提出解除。原告在上述《關於許可採用“天維牌”包裝銷售純芝孢子粉膠囊產品合同書》履行期限屆滿後要求確認上述合同無效的主張，沒有事實和法律依據，本院不予支持。”

14.  Although there is no express reference to the legislation, I am of the clear view that the issue had been addressed by the Intermediate Court.  But for that, the judgment could have stopped immediately before the passage quoted.  Hence, there is no room for admission of expert evidence on issue (d).

15.  Another point relied upon by Mr Ling to resist the application is that the Judgment is subject to an appeal by the 1^st Defendant.  I was told that the appeal had been heard on 20 August 2004 and the High People’s Court in Guangzhou廣州高级人民法院reserved its judgment in the appeal.  On that basis, Mr Ling submitted that our case is different from National Bank of Egypt International Ltd v Oman Housing Bank SAOC [2003] 1 All ER (Comm) 246.  He also referred this court to Article 141 of the Code of Civil Litigation (民事訴訟法) and contended that the effect of that article is that under PRC law, the following judgments are the only ones that have legal effects: (1) judgments of the Supreme People’s Court; or (2) judgments of other courts which are not appealable or not appealed within the prescribed time.

16.  I doubt very much if Article 141 has such effect.  But I do not have to determine that question because I am not deciding the effect of the Judgment in the mainland in terms of PRC law.  What I have to decide is in view of a judgment by the Intermediate Court, whether as a matter of Hong Kong law this court should permit expert evidence on PRC law on issues that had been decided by that court to be adduced.

17.  Further, I accept the submission of Mr Liao that the fact that there is an appeal does not provide any justification for admitting expert evidence on PRC law on the issues decided in the Judgment.  As I said in the course of submissions, if the appellate court delivered its judgment prior to the end of this trial, this court expects the parties to produce that judgment before this court as soon as possible.  There is simply no need nor room for the experts to rehash the submissions that were put before the High People’s Court in Guangzhou in that appeal before this court in the context of this trial.  If the points set out in the expert reports were not advanced in the appeal, given that they are points on PRC law that should have been addressed in the appeal before a PRC court, there is no reason why this court should entertain the same.  Otherwise, it would tantamount to the arrogation of this court into a court of appeal from the Intermediate Court.  It would be presumptuous for this court to hear such evidence and to pre-empt whatever decision the High People’s Court may reach in that appeal.  That would be wholly inappropriate and against international judicial comity.         

18.  For these reasons, I excluded the expert evidence set out in my order of 21 August 2004.